Highlights From Arrow’s Earnings Call

Earnings results from global distributors continue to support growth expectations in electronics components demand through the first quarter. On Wednesday, {complink 453|Arrow Electronics Inc.} posted record revenues of $5.2 billion for its fourth quarter ended in December, a milestone for the global distributor. (See: Arrow Electronics Reports Record Q4.)

As global distributors such as Arrow carry as many as 600 suppliers and reach hundreds of thousands of customers, they're a pretty good indicator for the state of the overall electronics supply chain. “Our results clearly demonstrate that we emerged from the downturn as an even stronger company,” says Paul J. Reilly, executive vice president, finance and operations and chief financial officer. “Going forward, we expect to continue to deliver strong results as we gain share in the markets we serve, create opportunities for Arrow in new markets, and execute on our sales excellence strategy.”

Arrow registered organic growth in its components business across all three of its sales regions, according to CEO Mike Long. Component lead times continue to normalize, and inventory is in balance. During the fourth quarter, “leadtimes came in and are in fact down to down to normal,” according to Reilly. “All the channel checks that we do — both informal surveys in North America and discussions with customers in Europe and Asia and with our supplier partners — say leadtimes shouldn't change dramatically; nor is there an imbalance in the supply chain.”

The company also grew through acquisition. Arrow has been digesting 10 acquisitions for the year including two in specialty distribution — A.E. Petsche in passive, electromechanical, and connectors (PEMCO) and Nu Horizons Electronics in high-end semiconductors. The Petsche buy expanded Arrow's presence in high-reliability wire and cable as well as in PEMCO. “Our goal was also to increase our presence in the aerospace and defense industries with an eye toward cross-selling with our commercial business,” says Long. Although these markets have been sluggish, “we expect we'll have more opportunities going forward.”

Europe outperformed expectations for the fourth quarter, counter to a seasonal slowdown. Long says Arrow experienced growth in automotive, lighting, and medical sales and expects that trend to continue. “We see components proliferate in areas that we never imagined before. Electronics inside automobiles has been expanding at a very good clip; there's much more demand generation and design activity then we have seen; and even in the downturn we were seeing 25 percent to 28 percent more designs than we ever had.”

8 comments on “Highlights From Arrow’s Earnings Call

  1. eemom
    February 5, 2011

    While this is good news for the Electronics Industry, overall economic numbers from January were less than expected.  Only 36,000 jobs were created and unemployment remains high.  I keep waiting for the economy numbers to reflect what we keep hearing from individual companies in order for optimism to set in.

  2. Mydesign
    February 5, 2011

           Finally companies have started showing increase in their profit level. Good, it a positive sign of growth after the recession era. Hope more and more such interesting positive economic outcomes from similar kind of companies. This increase in sales and profit shows that, markets are slowly moving away from their worst and sleeping condition, for a healthy business in a much profitable way.  This improved growth rate and profit may strengthen the views and vision for future aqusition and merging, as the part of expansion. It’s a very good sign and we can hope this growth trends continues in coming daya too, more over we are all expecting much more great outcomes from similar industries during the coming days.

  3. elctrnx_lyf
    February 5, 2011

    It is good to see that the distributors are on profit note almost through all 2010. Arrow and Avnet are the two leading distributors along with mouser who are handling the complete elctronic component distrbutor services. Does Arrow is also planning to make some acquisitions in the design services area like wht Avnet did with a german company recently?

  4. Anand
    February 7, 2011


      Surprising to see Europe outperforming the market. Any particular reason for this ? Did strengthning EURO in anyway helped the final numbers ?  Anyway good to see market recoering at faster pace.

  5. Ariella
    February 7, 2011

    I agree with eemom.  The numbers I see don't look all that encouraging.   I just came across this analysis of the pace of job growth: 

    This chart from the San Francisco Fed shows that, yes, if job growth performs at its post-recession peak, we'll be back to 2008's jobs  level by 2013.

    But, more worrying, it may take until 2018 or later   [emphasis mine] to get back to 2008's jobs level if we grow at an average pace of 82,000 jobs per month.

    Read more:


  6. eemom
    February 7, 2011


    Thanks for the numbers.  The numbers make sense since job growth is happening at a very slow rate.  One companies positive outlook is dwarfed by the overall market's inability to recover to pre-recession levels.

  7. Barbara Jorgensen
    February 7, 2011

    Arrow is definitely planning to make additional acqusitions as long as they are strategic. Even in good times, compnaies such as Arrow and Avnet still can't afford to acquire for the sake of acquiring–the final costs are just too high.

  8. Barbara Jorgensen
    February 7, 2011

    I get the sense that distributors themselves are surprised at the EU's perfromance. One analyst speculated that Europe is slow in emerging from the recession, which is why we are seeing an uptick now. On the flip side, I'd prefer a few more quarters pass before we declare emergence from the recession.

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